The Pakistan Credit Rating Agency Limited
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Afnan Iqbal

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PACRA Maintains Broker Management Rating of Ismail Iqbal Securities (Pvt.) Limited

Rating Type Broker Management
(27-Aug-21 )
(28-Aug-20 )
Action Maintain Maintain
Long Term BMR3 BMR3
Short Term - -
Outlook Stable Stable
Rating Watch - -

Ismail Iqbal Securities (Pvt.) Limited (“IISL” or “The Company”) mainly provides the services of equity brokerage wherein the Company has competitive institutional clientele. The Broker Management Rating is reflective of the Company's reviving performance on the back of hefty traded volumes and improved macro-economic factors. The Company has a modest market share in the brokerage industry. The rating remained restrictive on the back of lack of diversification in revenue streams. The assigned rating takes into account the Company's high exposure to market risk due to its proprietary book, which may indicate conflict of interest but the management has implemented adequate measures to cope with this risk. The Company provides prudent services to its clients in the form of complaint management, access to technical and fundamental reports and a dynamic reporting mechanism. The Company has lean organizational structure with most of the heads reporting directly to CEO. Seasoned top management, sound risk management and compliance procedures provide support to the rating. The Company has adequate capitalization levels with the net capital balance of ~PKR 131mln at end Jun-20. The Company earned brokerage revenue of ~PKR 65mln during FY20 (FY19: PKR 49mln), consequently the losses turned into a profit of PKR 0.5mln in FY20 (FY19: PKR -103mln) The Company has a low leveraged structure supported by sponsor’s loan which is well covered by liquid assets.
The ratings are dependent upon the persistent adherence of Board of Directors (BoD) in compliance with agreed parameters, management's efforts to improve market share in volume and value. Meanwhile, strong BoD framework, insightful monitoring of market risk and liquidity management remains imperative. Retention of key management personnel and continuous improvement in customer servicing tools will bode well for the Company. Meanwhile, upholding strong internal controls and diligent monitoring of risks is important.

About the Entity
Ismail Iqbal Securities (Pvt.) Limited, a venture of Ismail Group, was established in August 06, 2004. The Company operates through two branches, both in Karachi. The Company is owned by three individuals, wherein the majority shareholding (65%) lies with the CEO - Mr. Ahfaz Mustafa. The remaining stakes are owned by Ms. Ayesha Naeem and Mr. Azhar Iqbal 17.5% each. Mr. Ahfaz Mustafa has nearly 12 years of experience in the equity market. Mr. Fahad Rauf - Head of Research is an MBA and CFA candidate (Level-3) has over 7 years of extensive experience in the areas of Equity Research, Economic Research, Financial Modeling & Valuations. IISL’s board of directors comprises three experienced individuals including the CEO - Mr. Ahfaz Mustafa. The other director, Ms. Ayesha Naeem is a non-executive director and provides governance oversight. An independent director was also taken on-board during CY-21 which would further add value to governance oversight.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.